Saving domestic airlines from imminent collapse

There are genuine concerns that Nigerian airlines are facing many challenges, amid fears of possible collapse if urgent steps are not taken to address the problems confronting them. The domestic airlines have been grappling with high cost of aviation fuel or Jet A1 due to the conflict in the Middle East, which led to the shortage of aviation fuel and rise in prices exceeding 300 per cent in some countries due to supply chain disruptions.

In recent weeks, airline operators in the country have raised the alarm over the state of the nation’s aviation sector.  They described the present state of the sector as financially unviable. Some of the identified challenges of the sector include soaring prices of aviation fuel, high borrowing costs, excessive regulatory fees paid to government agencies, high insurance premiums, operational limitations, and inadequate government support. They contend that all of these will push domestic airlines to the brink. Consequently, these problems are causing flight delays, cancellations and reduced flight frequencies.

Besides, many airlines have been forced to cut operations. Some legacy airlines in other countries are temporarily shutting down as costs continue to rise beyond budgetary plans. The situation escalated recently, with members of the Airline Operators of Nigeria (AON) warning that they may shut down flights across the country. One of the immediate constraints is the soaring prices of aviation fuel that is being sold at N3,000 per litre or above. This has made airline operators in Nigeria to borrow at high interest rate to sustain flight operations. There is also the disparity in financing costs between Nigerian airlines and their counterparts in developed markets.                        According to statistics, funding is less than 33 per cent in Nigeria, a situation that puts domestic airlines at disadvantage with their foreign competitors. Undoubtedly, the rising fuel prices, expensive credit facility have made the survival in the aviation industry increasingly difficult for local airlines. Both small and large carriers are facing the intense pressure to remain in business. For smaller carriers with fewer aircraft and limited schedules, they are unable to secure enough fuel to operate select flights across some domestic routes.         Large carriers are feeling the strain more as the surge in aviation fuel prices is pushing them to the brink. Recently, the International Air Transport Association (IATA) warned that airlines in developing markets may face tougher soaring fuel costs, reduced profits, and rising fares amid global market pressures. This concern should be addressed. According to IATA, airlines will have to pay an extra $10 billion on jet fuel this year, with fares inevitably rising to cover the bill since the US/Iran conflict has choked off oil supplies, following the delay by Iran to open Strait of Hormuz.

For instance, one-way flight ticket from Lagos to Abuja now costs between N130,000 and N180,000, depending on the airline. But there is a limit to which operators can transfer the cost to passengers given the economic climate in the country. At the high-level stakeholders meeting on April 22-23, in Abuja, with the Minister of Aviation and Aerospace Development, Festus Keyamo (SAN), airline operators expressed their concerns about the rising cost of Jet A-1 and its impact on the sector and Nigeria’s economy, if not urgently checked. According to recent statistics, the cost of fuelling a single flight on domestic route has skyrocketed from an average of N2.1 million in January 2026 to about N7.6 million as of April 2026. This represents a staggering increase of over 350 per cent within three months. The implication is that if this continues, many airlines may not break even.     Unfortunately, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the apex regulator in the oil and gas sector, has not been forthcoming in resolving the aviation fuel crisis.                As an interim measure, the domestic airlines should be allowed to control their ground handling to prevent the alleged sabotage. We also urge the Federal Government to go beyond the earlier support given to domestic airlines and reduce the rising costs of operations. Excessive fees paid to government agencies like the Nigerian Civil Aviation Authority (NCAA) and the Federal Airport Authority of Nigeria (FAAN) should be drastically reduced.

However, we welcome the Federal Government’s intervention through the 30-day credit window granted few months ago to ease liquidity constraints for operators. By this measure, marketers were directed to sell aviation fuel directly to airline operators.   How this will stabilise prices remains uncertain, as airline operators are still demanding urgent regulatory measures as well as some reliefs. Above all, there is need for urgent review of charges the domestic airlines are saddled with in line with global best practices.